EQS-News: EVN AG: Business development in the first half of 2021/22

EQS-News: EVN AG / Key word(s): Half Year Results
EVN AG: Business development in the first half of 2021/22

25.05.2022 / 07:30
The issuer is solely responsible for the content of this announcement.

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Highlights

• Historic distortions on international energy markets
• Decline in EBIT and Group net result; different effects on diversified
business areas
• Construction of three wind power projects with a total of 67.2 MW
• Increase in network investments for the integration of additional
renewable generation
• Full commercial operations at the natural filter plant in Petronell
• Commercial commissioning of the thermal sewage sludge treatment plant
in Halle-Lochau
• Confirmation of EVN’s ratings by Moody’s (A1, stable outlook) and
Scope Ratings (A+, stable outlook)

Key results

• Revenue: +65.5% to EUR 2,126.7m
• EBITDA: –21.6% to EUR 420.2m
• EBIT: –17.1% to EUR 211.0m
• Group net result: –27.6% to EUR 127.4m
• Net debt: EUR 1,134.4m (30 September 2021: EUR 813.8m)

Energy sector environment
Temperatures in EVN’s three core markets were lower than the long-term
average during the first half of 2021/22. Primary energy carriers and CO₂
certificates were faced with massive price increases and significant
market distortions during the reporting period. The underlying reasons
included the increasing economic recovery after Covid-19 as well as the
war in Ukraine. The market prices for base load and peak load electricity
followed these trends with a significant increase in the first half of
2021/22. The spot market prices for base load and peak load electricity
averaged EUR 211.0 per MWh and EUR 251.4 per MWh, respectively, for a
substantial increase over the comparable prior year values of EUR 48.1 per
MWh and EUR 58.9 per MWh.

Increase in Revenue, EBIT and Group net result below previous year
Revenue recorded by the EVN Group rose by 65.5% to EUR 2,126.7m in the
first half of 2021/22, based on a variety of individual factors: In South
East Europe, the upsurge in electricity prices led to sound growth in
energy distribution while weather-related volume effects were responsible
for higher network revenue. In Austria, the network tariffs set by
E-Control as of 1 January 2021 and 1 January 2022 had a positive influence
on network revenue. Other important impulses were provided by price
effects from renewable electricity generation and positive valuation
effects from hedges. The more frequent use of the Theiss power plant by
the Austrian transmission network operator for network stabilisation
generally offset the revenue lost from the Walsum 10 power plant following
the sale of EVN’s investment and the termination of electricity purchases
from this source. Growth was also recorded in the international project
business.

Other operating income fell by 67.1% year-on-year to EUR 54.4m, chiefly
due to the absence of a positive non-recurring effect from the previous
year which resulted from the takeover of an additional electricity
procurement right.

Similar to the development of revenue, the cost of electricity purchases
from third parties and primary energy expenses – which totalled EUR
1,314.0m (previous year: EUR 568.7m) – increased substantially. This
development resulted, above all, from higher energy procurement costs in
South East Europe, above all to cover network losses, as well as an
increase in primary energy expenses from the above-mentioned, more
frequent use of the Theiss power plant and higher procurement costs at EVN
Wärme. The cost of materials and services increased by 20.6% to
EUR 290.4m in line with the development of revenue in the international
project business.

Personnel expenses were 1.4% higher year-on-year at EUR 179.4m due to
adjustments required by collective bargaining agreements. The average
number of employees increased to 7,147 (previous year: 7,140 employees).
Other operating expenses rose by 12.4% to EUR 62.4m due to higher
receivables write-offs in North Macedonia.

The share of results from equity accounted investees with operational
nature fell by 33.0% to EUR 85.2m. A major part of this decline resulted
from higher procurement costs for electricity and natural gas at the
supply company EVN KG in Austria as well as a lower earnings contribution
from RAG. In the previous year, this position also included a revaluation
of EUR 9.6m to the Ashta hydropower plant in Albania. EBITDA recorded by
the EVN Group fell by 21.6% year-on-year to EUR 420.2m in the first half
of 2021/22.

Scheduled depreciation and amortisation declined by 5.9% year-on-year to
EUR 158.3m, among others due to the sale of EVN‘s 49% investment in the
Walsum 10 power plant as of 30 September 2021. The effects from impairment
tests – which totalled EUR 50.9m in the first half of 2021/22 (previous
year: EUR 113.1m) – reflected different effects: In the second quarter of
2021/22, a change in the Group’s risk and earnings expectations for future
projects based on the ongoing global distortions led to the recognition of
an impairment loss to goodwill in the international project business (EUR
52.9m) and to the residual carrying amount of the two sludge-fired
combined heat and power plants in Moscow (EUR 4.4m). These impairment
losses were contrasted by a revaluation of EUR 6.4m to the Kavarna wind
park in Bulgaria to reflect the changed regulatory conditions in
combination with an increase in electricity prices. In the previous year,
the takeover of an additional electricity procurement right resulted in
the recognition of impairment losses totalling EUR 113.3m. In total, EBIT
declined by 17.1% to EUR 211.0m.

Financial results dropped to EUR –31.3m (previous year: EUR –21.0m) owing
to weaker performance of the R138 fund in the current market environment
and as a result of foreign exchange developments. After the deduction of
EUR 44.1m (previous year: EUR 38.7m) in income tax expense and the
earnings attributable to non-controlling interests, Group net result for
the period equalled EUR 127.4m. This represents a year-on-year decline of
27.6%.

Solid balance sheet structure
EVN has a solid and stable capital structure which will provide a good
foundation over the coming years for the realisation of the extensive
investment programme in the areas of network infrastructure, renewable
generation and drinking water supplies. Net debt totalled EUR 1,134.4mn as
of 31 March 2022.

Energy. Water. Life. – Developments in the energy and environmental
services business

Energy business

EVN’s electricity generation declined by 3.9% year-on-year to 1,998 GWh in
the first half of 2021/22. Renewable generation equalled 1,192 GWh
(previous year: 1,112 GWh) and represented 59.7% of the total (previous
year: 53.5%). Above-average wind flows offset the reduction in hydropower
generation volumes which resulted from a year-on-year decline in water
flows. Electricity generation in the thermal power plants declined by
16.8% to 805 GWh due to the sale of the 49% investment in the Walsum 10
power plant as of 30 September 2021. This was, however, offset in party by
the increased use of the Theiss power plant for network stabilisation.

In line with the goals for expansion of renewable energy as part of EVN`s
strategy 2030, there are three wind power projects with a total of 67.2 MW
currently in realisation. New construction of wind parks in Schildberg and
repowering of existing equipment in Japons with an installed capacity of
12.6 MW each. At the wind park in Palterndorf-Dobermannsdorf (42 MW)
high-efficiency 6 MW wind power plants will come into operation for the
first time. Commissioning of this wind park is scheduled for the next
financial year.

The increased expansion of eco-electricity and the smart metre roll-out
are responsible for an increase in network investments to support the
continued protection of supply security. There is a massive demand for
network expansion and investments in smart grid pilot projects, in
particular to accommodate the sharp rise in photovoltaic equipment in the
low and medium voltage networks.

Environmental and water business

The continuous improvement of supply security and drinking water quality
in Lower Austria represents a focal point of EVN’s investments. In March
2022 full commercial operations was started at the already fifth natural
filter plant of EVN in Petronell. This plant now supplies ten communities
east of Vienna International Airport with drinking water that is naturally
softened without the use of chemicals. Also in March 2022 commissioning of
the first of three construction sections (Pallweis – Zwettl) on the new 60
km cross-regional connecting pipeline from Krems to
Zwettl took place.

In the international project business, WTE Wassertechnik received a
contract for the second section of the Cluj-Sălaj drinking water supply
project in Romania in March 2022 with a contract value of approximately
EUR 45m. The contract comprises construction of transport pipelines, an
elevated tank and a cleaning station. In April 2022 commercial
commissioning of the thermal sewage sludge treatment plant in Halle-Lochau
took place which was built by the 50:50 joint venture sludge2energy. As of
31 March 2022, WTE Wassertechnik had twelve projects for wastewater,
drinking water and thermal sewage sludge treatment under planning and
construction in Germany, Poland, Lithuania, Romania, Bahrain and Kuwait as
well as two further thermal sludge utilisation projects in progress in
Germany (Hannover und Straubing) through the 50:50 joint venture with
sludge2energy.

Outlook confirmed for the 2021/22 financial year
EVN expects Group net result of approximately EUR 200m to EUR 240m for the
2021/22 financial year. However, stronger or sustained distortions on the
energy markets could have a negative influence on expected results.

The Letter to Shareholders on the first half of 2021/22 is available under
www.investor.evn.at.

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25.05.2022 This Corporate News was distributed by EQS Group AG.
www.eqs.com

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Language: English
Company: EVN AG
EVN Platz
2344 Maria Enzersdorf
Austria
Phone: +43-2236-200-12294
E-mail: info@evn.at
Internet: www.evn.at
ISIN: AT0000741053
WKN: 074105
Indices: ATX
Listed: Vienna Stock Exchange (Official Market)
EQS News ID: 1359827

 
End of News EQS News Service

1359827  25.05.2022 

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